A friendly loan may be without any interest and there is no provision to charge any notional interest on the same.
Precautions and documentation:
1. All loan transaction should be by account payee cheque or bank draft
2. If you are giving loan which is interest free, please ensure that loan is out of your own savings and not intereset bearing borrowed funds. If you are paying interest on borrowed funds, charge interest on loan agiven atleast equal to the rate of your borrowed funds.
3. If you are accepting loan, need to be more cautious regarding creditworthiness of your lender. They should be men of means and could prove the same with documents.
There is no limit of borrowing for business purposes, provided your lenders have capacity. Yes, your bankers may have issues with these friendly loan if you are planning to borrow from them too.